November 17, 2011 – TOKYO – The International Energy Agency has estimated that Japan would need to spend $3 billion per month on additional oil and LNG in 2012 if the country’s nuclear power output falls to zero next year, the executive director of the International Energy Agency, Maria van der Hoeven, told reporters Wednesday. Speaking to Platts in Tokyo, van der Hoeven said that Japan would need an extra 460,000 b/d of oil and 30 billion cubic meters of gas in 2012 if the country had no nuclear power output. When asked about Japan’s winter oil and gas demand outlook, Van der Hoeven declined to comment as the country’s actual demand situation would depend on the country’s nuclear output situation, which remained uncertain. Japan is about to enter its winter power demand season, which normally runs through December-March, and the weather and nuclear utilization rates have a direct impact on crude, fuel oil and LNG consumption for thermal power generation. Japanese power utilities have hiked their oil and LNG consumption to make up for their shortfall in nuclear output in the wake of the devastating March 11 earthquake, and subsequent nuclear outages across the country amid safety concerns. Only 11 nuclear reactors are currently operating in Japan with a combined capacity of 9.864 GW, representing 20% of the country’s total installed capacity of 48.96 GW spread over 54 reactors, according to Platts calculations. It is widely expected that none of the nuclear plants shut for scheduled maintenance would be allowed to restart any time soon because of stress test conditions imposed by the government in July. If none of the nuclear reactors are allowed to restart in the coming months, Japan is scheduled to lose its nuclear output completely in April or May 2012 because of the Japanese regulation that requires nuclear power plants to carry out scheduled maintenance at their reactors at least once every 13 months. If this happens, it would be the first time Japanese nuclear power production has fallen to zero since it commenced in 1966. Speaking at a press conference in Tokyo, van der Hoeven expressed her concern over rising crude oil prices that will have “negative impact” on ailing economies in Europe and “poor developing countries.” –Platt

Western financial treasuries bubble: “Because fears are spreading about even top-rated European states, investors favour relatively safer U.S. Treasuries and JGBs,” said Shogo Fujita, chief Japan bond strategist at Bank of America Merrill Lynch. The European debt woes have benefited JGBs, which have attracted safe-haven bids thanks to Japan’s ability to finance its debt domestically despite its huge debt burden, now standing at 200 percent of GDP. –Reuters

To put this crisis into perspective, investors favor the so-called ‘relative safety’ of U.S. Treasuries and Japanese Government Bonds and it is precisely this kind of thinking that should keep us all up at night. Such a move by the world’s financial wizards is the long-term equivalent of burning money. Why? Japan’s debt to GDP ratio is already at 200%. That means for every $1 (or Yen) the entire Japanese economy is capable of generating in a given year- there’s $2 more in debt that it has to repay. When you spend more than you have; you’re bankrupt. When you spend more than you’re capable of producing- you’re a black-hole. If that hole wasn’t too large for Tokyo to climb out of, consider this- Japan has to maintain the health and retirement of one of the largest aging populations in the industrialized world; it has to pay down in deficit, become immune to the Eurozone debt cancer, avoid any more natural disasters, and it has to nearly rebuild its entire energy infrastructure from ground-zero while importing nearly all of its oil and natural gas. Sadly, the U.S. is no better off. The Federal Reserve, the U.S. Central Bank or Lender of last resort, has now become the largest holder of U.S. debt in the world- exceeding the obligations of even China. All this is happening during a recession and under the shadow of a potential conflict looming for the U.S. in the Middle East with Iran and under a U.S. budget deficit crisis that has already pierced the $15 trillion dollar mark. To put a trillion dollars in some kind of substantial context, if you opened a business at the time of Christ, 2000 years ago, and if you lost one million dollars a day in that business; it would still take you another 700 years to lose a trillion dollars. It’s an inconceivable amount of money. Total U.S. debt obligations now actually exceed $54 trillion dollars. If that wasn’t bad enough, sovereign debt is causing bond markets in Europe to implode. Insured risk markets will follow- including the unregulated $600 trillion dollar derivatives market which will topple banks and sovereign treasuries will follow that disembowelment. People who think the modern world as we know it can’t possibly end apparently didn’t hang around in class long enough to realize there was homework. – (c) The Extinction Protocol

22 Responses to Why the mounting energy crisis and debt-bomb will lead to the meltdown of Japan

I can see Government’s cutting spending to the bone. Since everything rolls downhill, the first to go is social services, health care, aide. Food and fuel prices will rise exponentially. If anyone thinks the Occupy movement is bad, wait until the real riots start (which will include looting to get food) and martial law is declared. Not only will there be civil discourse but the threat of nuclear war is looming on the horizon, not from just one country with an unstable government, the threat is from multiple countries that now have or strive for nuclear weapons, North Korea, India, Iran, Russia.
I am extremely worried for Mother Earth, the truly innocent one’s. As I’ve said before, as far as humans go, “The needs of the one outweigh the needs of the many.”

Alvin,
What is your opinion on how long it will before the US financial system completely topples? ie: depression, stock market crash, etc? Could you portray a scenario of events as you see they might happen?

If we have a trigger…it could begin happening anytime but it is a process. That could be a major natural disaster that affects the world, a major terrorist event, a war or act of terrorism, or several large European or American banks default simultaneously. The problem is everything is, at some point, backed by a surety market, ‘conscripted financial agreement’ to pay responsible parties. When that unravels, everything basically unravels. Bonds, credit default swaps, pensions, CDO’s ect. It’s the equivalent of destroying the banking system from the inside. Every credit contract is based on someone’s promised ability to pay and someone else has to underwrite those risks if they don’t. So beyond the money we see circulating in the world…the invisible credit market supporting it is even larger and that is what is now at risk because people have gotten rich off credit transactions; not money. It’s gone from just bad debts to becoming a systemic financial problem. We now have more debts accumulated from protecting or guaranteeing the transactions of cash than we have available cash assets on hand- any run to unwind those positions and the system falls down around our ears. Look for problems with and in the futures and bond markets, municipal bankruptcies, pension defaults, insurance bankruptcies, and problems with big banks. Remember the Federal Reserve is over-leveraged and can’t rescue anyone else so chances are- once a big bank is in trouble; a dozen more will tumble right behind them. We have to be astute enough to see the warning signs to avoid any kind of liquidation in a crisis- otherwise, those assets run the danger of forfeiture. In 2012, we’re going to have major financial problems globally- and from there, in my opinion, it only gets worse. By the late summer of 2012, the U.S. will have problems making debt interest payments without implementing the kind of austerity measures that’s needed just to keep the country afloat- cuts somewhere in the $3 to 4 trillion dollar range. So my guess is something radical from the government has to happen with this election or in-lieu of it.

Alvin that was a very good explanation of things in terms that most can understand. This is what is needed out there for the masses to read…….. well if you can tear them away from the X Factor or Survivor, which they are watching on the 52 inch plasma TV they bought on one of those own it now, no payments for 24 months plan.

Seriously though, my wife and I just shake our heads every night because we rarely meet anyone who has the slightest idea of what is going on out there………… with anything. I bet 95+ percent of the people we know or meet are almost completely in the dark as to what is going on with the global financial picture and the depth of the problem, the big picture in the Middle East and the changes happening with the planet we live on.

For every person that is attempting to stay on top of things, there is a vast sea of the brain dead.

K.J.
Your words instantly reminded me of an unforgetable cartoon done by the famous poet and cartoonist Michael Leunig. It depicts a father and son staring at their ’52 in plasma’ showing a beautiful sunrise, while in the background through a large window the exact beautiful sunrise was happening.
A picture paints a thousand words.
Thanks for the tireless work Alvin, me thinks you will be getting very busy.

Thank you for this explanation Alvin. Today I attended a seminar about financial planning for women. It was all I could do to keep myself from screaming out “soon the dollar with be worth nothing, and putting it into 401k’s and savings accounts is a loser’s game.” It was very disheartening to see the other people in the room accept this information as good financial planning. If it wasn’t for you and this site, I would have been one of those people in the room today. Blessings.

I’ve always been of the mind that if you arm people with enough facts, their intelligence is more than enough to guide their decision process. This crisis is something we want to be wide-awake and watching develop.

I feel bad for the Innocent in Japan Kids, and Familys who fathers have to go to work for weeks on end and then only get to come home for a few nights😦 I wish the Age of Aquarius would hurry up and Be here. sigh another 1000 or so years😦

G.McCray – I understand from your post you believe in Bible prohecy, fair enough, good for you, I do also but to an extent. Therefore, I would never presume to definitely discard anybody else’s interpretation of prophecy or Belief system. – It is both prudent & wise to both study what our Ancients both wrote & orally passed down to us – be they Biblical, Native American, Sybilline, Mayan, Celtic or even the more modern seers such as Cayce & Nostradamus.

I’m Pagan, and Personally i lost all Belief In Jesus Christ and the return of him ALONG time ago, I don’t mean to Offend anyone, But it just seems selfish of us to believe That. I mean what about animals and Aliens and what not? The universe Is bigger then most people Know, Especially Christian and Catholic people. We don’t realize that we are soooo tiny, we are literally Like a spec of Dust In a Dust storm…. And sure things are going to get bad on Earth, But Our Consciousness will Prevail And we will come back. When a field of Wild life burns down, Healthier Vegetation Will Sprout This goes for us. We need to stop Believing in all of this Nonsense , I wonder if the Ancient Egyptians and Aztecs Believed in Jesus? Oh wait they all got wiped out, and yet here we are again Living as humans Only we have Drifted down a long river of Evolution, The earth has gone through this So many times It is “the end of the world” but Not like what people Assume. It means Big change is Here, And it has been Awaited for over 2,160 Years, So Sit back, enjoy your ride And stop Orgasming because “the return of Christ” is upon us…

Suicide will become epidemic- You’re right. People in 3rd world countries will find it easier to adjust because the standard of living is already marginal at best now. We have a whole generation who have not known such deprivation since World World II. Bread has always been on the table and dollars have always been in the bank. That’s about to change…

Audrey Hepburn recounts her horrific tales of deprivation during the Nazi occupation of the Netherlands: “From November 1944 until May 1945, a period known in Dutch history as ‘the hunger winter’, she suffered terrible starvation. The Germans blockaded her area of the Netherlands, causing mass malnutrition that killed around 18,000 people. Hepburn, 16, was reduced to eating tulip bulbs and trying to make bread from grass. She spent the war’s closing days hiding from the Nazis in a cellar. Hepburn’s slight figure — her waist was only 20in — came not from any celeb-style fad diet. It was a legacy of the jaundice, anemia, respiratory problems and chronic blood disorders she contracted in those desperate days. After a lifetime of quietly suffering frail health, she died in 1993, two months after undergoing an operation for colon cancer. She said of her privations: ‘After living for years under the Germans, you swore you would never complain about anything again.’ –Daily Mail http://www.dailymail.co.uk/health/article-2031505/Audrey-Hepburn-Is-key-stopping-obesity-epidemic.html

Which probably explains why Audrey spent the latter part of her life helping feed the under-priviledged children of Africa.